Maternity and paternity leave in Australia: what EOR employers must know

Section 70 provides up to 12 months of unpaid parental leave, while Section 76 allows employees to request a further 12-month extension, taking the total potential entitlement to 24 months. Employers may refuse an extension request only on reasonable business grounds, with disputes reviewable by the Fair Work Commission.

The 2023 reforms materially expanded flexibility in two ways:

• Each parent can now independently access up to 24 months of leave regardless of how much leave the other parent takes
• The previous 8-week cap on concurrent leave was removed

The Protecting Worker Entitlements Act 2023 increased flexible unpaid parental leave from 30 days to 100 days, usable within the 24-month period after birth or placement rather than as one continuous block. Pregnant employees may also begin flexible unpaid parental leave up to 6 weeks before the expected birth date.

Employees are generally required to provide written notice at least 10 weeks before leave starts, with confirmation 4 weeks before commencement. Where advance notice is not practicable, such as premature birth or medical complications, the entitlement remains protected provided notice is given as soon as practicable.

The Fair Work Act separately provides protections around:

• No safe job leave where pregnancy creates workplace health risks
• Unpaid special parental leave for pregnancy-related illness or miscarriage
• Stillbirth and infant death protections preserving the employee’s leave entitlement

For miscarriage before 20 weeks, employees may also access 2 days of compassionate leave.

Section 84 provides a return-to-work guarantee. Employees are entitled to return to their original role or, where that role no longer exists, to a comparable position nearest in status and pay. Australian tribunals interpret “comparable” narrowly, meaning employers must show that any restructure during leave was genuinely unrelated to parental leave status.

Two areas regularly create compliance issues for foreign employers and EORs:

• Annual leave does not accrue during unpaid parental leave except during keeping in touch days or periods of paid leave taken during the parental leave period.
• Adverse action linked to parental leave may breach both the Fair Work Act and anti-discrimination legislation

The scheme is mid-expansion through a multi-year reform.

The expansion to 26 weeks from 1 July 2026 is already legislated, not merely proposed. From that date, 4 weeks (20 days) will be reserved exclusively for the secondary parent or non-primary carer on a “use it or lose it” basis. These reserved days cannot be transferred to the primary carer and are forfeited if unused. Single parents retain access to the full 26-week entitlement without forfeiture risk.

Services Australia has also confirmed an administrative adjustment for children born or adopted on or after 1 July 2026. Claimants will initially receive a balance of 120 days, with an automatic 10-day top-up applied once proof of the post-1 July 2026 birth or adoption is provided.

The work test requires at least 330 hours of qualifying work across a minimum 295 consecutive days (approximately 10 months) within the 392-day period before birth or adoption. Qualifying work includes employment, self-employment, and work performed outside Australia.

The rules also impose continuity requirements:

• No single break during the qualifying period can exceed 12 weeks (84 days)
• Permissible breaks, including parental leave, illness, and public holidays, are excluded from the calculation
• Special provisions apply to workers moved from hazardous duties during pregnancy

The income test is based on adjusted taxable income (ATI) for the financial year preceding the earlier of the claim date or birth date. For 2024-25:

• The individual ATI limit is AU$180,007
• The family ATI limit is AU$373,094

A claimant who exceeds the individual ATI threshold may still qualify under the family-income test if the combined household ATI remains below the family limit. Single parents are assessed solely against their own ATI. The 2025-26 thresholds will be indexed from 1 July 2025 and should be checked against current Services Australia guidance before advising employees.

PPL is paid at the national minimum wage rate, which is indexed annually by the Fair Work Commission. For 2025-26, the rate is AU$948.10 per week, or AU$189.62 per day based on a 5-day week. A full 26-week (130-day) entitlement equates to approximately AU$24,650 gross before tax. PPL is taxable income and subject to PAYG withholding at the recipient’s marginal tax rate.

For most white-collar employees, the government-funded scheme operates as a baseline entitlement rather than full income replacement, since the minimum wage sits materially below market salaries.

From 1 July 2025, the Australian Government also began paying 12% superannuation guarantee contributions on government-funded PPL for children born or adopted on or after that date. The contribution is administered by the Australian Taxation Office using Services Australia payment data and deposited annually into the employee’s nominated super fund.

At the 2025-26 rate, 24 weeks of PPL generates approximately AU$2,728 in super contributions. The reform was introduced to address the long-standing gender super gap created by employees receiving no superannuation during periods of government-funded parental leave.

Two payment pathways operate under the PPL scheme.

1. If an employee meets the eligibility criteria for employer-administered Paid Parental Leave (PPL), the employer is required to process the payment through payroll. The payment is funded in advance by Services Australia and paid to the employee through the employer’s usual payroll cycle, with applicable PAYG withholding applied.
2. Where those conditions are not met, Services Australia pays the employee directly. Employers administering PPL must register through Business Hub using PRODA.

PPL days must be taken before the child’s second birthday or second anniversary of placement. Since the 2023 reforms, leave can now be taken:

• As a continuous block
• In smaller segments
• As single days

This flexibility materially changes how employees structure phased returns to work and shared-care arrangements.

The Fair Work Ombudsman enforces NES compliance under Section 539 of the Fair Work Act, with penalties tied to Commonwealth penalty units. The current penalty unit value is AU$330 from 7 November 2024.

Current exposure thresholds are:

• Standard NES contravention: 300 penalty units (AU$99,000) for a body corporate
• Serious contravention involving knowing or reckless conduct: 3,000 penalty units (AU$990,000)
• Underpayment-related contraventions post-Closing Loopholes: up to 1,500 penalty units (AU$495,000) or three times the underpayment amount

“Restructuring” a role during parental leave and presenting a reduced or materially altered role on return is a recurring source of litigation. Section 84 requires the employee to return to the same position or, where genuinely unavailable, to the role nearest in status and pay.

The Fair Work Commission applies a high threshold here. Changes to:

• Location
• Reporting line
• Seniority
• Pay

will attract scrutiny where the operational justification is weak or the timing closely aligns with parental leave.

For EOR arrangements, this risk is particularly important because the EOR remains the legal employer even where the commercial restructuring decision is made by the client company.

Under Section 65, eligible employees, including parents of young children and parents of children with disabilities, may request flexible working arrangements.

Following the 2023 amendments, employers must:

• Discuss the request with the employee
• Consider alternative arrangements
• Provide written reasons if refusing the request
• Base any refusal on genuinely reasonable business grounds

Disputes can now be referred to the Fair Work Commission for arbitration, and the FWC may order the employer to grant the request. Blanket refusals of flexible work arrangements are no longer low-risk and require documented operational justification.

While the government began paying 12% SG on government-funded PPL from 1 July 2025, employers must still pay SG on any employer-funded parental leave provided on top of the government scheme.

Failure to pay SG on employer-funded parental leave breaches the Superannuation Guarantee (Administration) Act 1992 and may expose the employer to:

• Interest charges
• Administrative penalties
• ATO enforcement action

Employers moving from a historical “no super on parental leave” position should separately budget for:

• The government’s 12% SG contribution on government-funded PPL
• The employer’s own 12% SG obligation on top-up payments

Long service leave (LSL) is governed entirely by state and territory legislation, with no federal LSL framework. The rules vary materially across jurisdictions.

Examples include:

• Victoria is counting up to 52 weeks of unpaid parental leave toward continuous service
• South Australia excludes unpaid parental leave entirely
• NSW is applying a “substantial connection” test for interstate or overseas service

For EOR arrangements, this creates a significant tracking obligation because LSL liability attaches to the legal employer rather than the client company.

EOR clients competing for talent in Australia should expect market practice to sit materially above the statutory minimum entitlement.

Common 2025-26 benchmarks in technology, finance, consulting, and professional services include:

• 4 to 6 weeks of employer-funded secondary carer leave
• Employer-funded superannuation contributions during unpaid parental leave
• Return-to-work bonuses, commonly around 6 weeks’ pay

For roles that are structurally employment relationships, an EOR converts the engagement into compliant Australian employment with full NES and PPL Act coverage, including Services Australia administration and Section 84 return-to-work protections.

Where the underlying relationship is genuinely contractor-based, an AOR can administer compliant contractor payments and tax handling without triggering employee entitlements under the NES. The correct model depends on the substance of the engagement rather than the contractual label applied to it.